Jefferies recovery tracker (JRT) averaged 102% in Mar’21, -1ppt MoM, partly as urban activity tapered down somewhat on increasing COVID instances. Localised lockdowns are receiving more stringent, and we think close to term financial activity trajectory could dip somewhat. We have turned defensive to make in close to term lockdown dangers. OWT IT Svcs, UWT Fin. Other leading picks – RIL, Tata Steel, Concor, PGRD, GPL, Colgate, Dr Reddy’s & Maruti.
Activity levels show restricted effect in March: We track 20 financial higher-frequency activity indicators to formulate our India financial activity indicator. March month activities averaged 102%, -1ppt MoM. We note that the current week (ending 4th April) has shown considerable activity dip but an precise diagnosis of the dip is restricted by a couple of public holidays.
Some sluggishness in urban/metro activity: The activity sluggishness MoM in March was on account of some weakness in urban indicators, which partly reflects the effect of increasing COVID instances and some restrictions. Congestion levels declined 13ppt to 80% and travel & hotel bookings have been -6ppt MoM. Workplace mobility and transit information was flat. Real estate activity levels continued their increasing trend. Suburban rail targeted traffic also enhanced MoM by 5ppt.
Broader information points retain trend: The low base kicking in for a number of information points (national lockdown from late Mar20) tends to make direct information comparison tricky. A look at underlying trend (2 year CAGR proxy) tends to make us think that broader financial activity in March, was at levels equivalent to February. Electricity consumption was flattish (2 year CAGR basis) at +6%. Rail freight (2 year CAGR) was +4% vs. +6% in Feb. Petrol consumption was +5% y-o-y in Mar’21 vs. Mar’19. Diesel consumption for exact same period was -5%. Domestic demand indicator imports (ex petro, ex Gold, 2 year CAGR) grew 2% y-o-y in Mar vs. 4% pace in final month. Auto sales information from OEMs shows PV/2W sales up 4%/2% YoY on 2 year CAGR basis. The e-way bill generation was +14% y-o-y (2 year CAGR) vs. 13% in Feb.
Real estate, building activity greater: Property registrations in Mumbai and Delhi have been at multi-year highs. Steel consumption was +40% y-o-y in March but down on 2 year basis.
Rising tax collection: GST collections for March (Feb activity) have been up 27% y-o-y. This prompted govt. to disburse greater than budgeted funds to states in Mar21.
COVID trends worrying: COVID instances addition run-price has now exceeded 2020 peak. Deaths are also increasing (~5x from low) whilst nevertheless much less than half the prior peak, could spike a great deal greater. COVID surge in Maharashtra has currently prompted a restrictive lock-down and a number of other states are also incrementally restricting financial activity. Vaccination pace has risen to c.3m/ day. At about 20% of 45+ population receiving at least 1 dose, India could have to wait a couple of months ahead of resuming its recovery trajectory.